Norfolk Southern buys stake in rail line to boost Capital Region business
ERIC ANDERSON -- Times Union -- May 21, 2008
Norfolk Southern Railway Co. is buying a 50 percent stake in a historic rail line linking Mechanicville and Ayer, Mass., outside Boston, in a bid to boost service in the Capital Region and New England.
As part of an agreement with the current owner, Pan Am Railways, the 155-mile line will undergo $87.5 million in improvements, including new track and signals. In all, Norfolk, Va.-based Norfolk Southern will pay $140 million for its share of the line, which has been dubbed the Patriot Corridor.
The deal includes another 281 miles of connecting track, including trackage rights. A new company, Pan Am Southern, will own the track. North Billerica, Mass.-based Pan Am Railways -- the former Guilford Transportation Co. -- will have an equal stake with Norfolk Southern in the newly created entity.
"We have identified the Capital Region as being an area that certainly is in need of some new facilities," said Norfolk Southern spokesman Rudy Husband. "We've cobbled together a service we operate over Canadian Pacific lines between Binghamton and the Albany area.
"We hope we're going to bring a higher level of competition to the Capital Region," he added.
With the breakup of Conrail in 1999, CSX Transportation took over its tracks in the Capital Region and New England. Norfolk Southern, meanwhile, got Conrail's Southern Tier route through Binghamton, Elmira and Jamestown.
The partnership "gets Norfolk Southern into the New England market, which is something we've been trying to do since we acquired 58 percent of Conrail," Husband said. "There's a lot of opportunity in New England and the Capital Region."
CSX officials could not be reached Tuesday for comment. And calls to Pan Am Railways over two days weren't returned.
The partnership could be good news for Saratoga and Schenectady counties. Norfolk Southern is seeking to lure freight from the highways with its intermodal trains, where truck trailers travel on flat cars. With a shortage of truck drivers and diesel prices nearing $4.80 a gallon, Husband said a high-speed rail corridor could compete.
A study last year by the Boston Metropolitan Planning Organization projected that highways in Massachusetts would carry 222 million tons of freight by 2010, compared to 20 million tons for railroads. The figures were projected to climb to 265 million tons on the highways by 2020, compared to 25 million tons on the rails.
But railroads have successfully competed with trucks elsewhere.
CSX and Union Pacific Railroad teamed up in October 2006 to operate an express produce train for Railex LLC once a week between Washington state and Rotterdam. A second train, carrying California produce to the Capital Region, is expected to operate beginning this fall, when construction of a new terminal in Kern County, Calif., is completed. Railex also plans to operate a second train from Washington state, officials have said.
Railex says its unit trains of refrigerated cars are far more fuel-efficient than trucks, reducing costs for shippers.
Norfolk Southern said it anticipates building new intermodal and automotive terminals in the Albany area. A Pan Am predecessor, Boston & Maine Railroad, once operated an extensive freight yard in Mechanicville.
And Norfolk Southern could serve major distribution centers in the Capital Region. Ace Hardware, Target and Wal-Mart all operate here.
"We certainly serve distribution centers in other parts of the country," Husband said.
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